A.B. and SONS vs State of Tamil Nadu

P.P.S. Janarthana Raja J.

The above revisions are filed by the assessee u/s 38 of the Tamil Nadu General Sales Tax Act, 1959 against the common order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai, in T. A. Nos. 587 and 588 of 1998 dated October 4, 1999. The revisions were admitted on September 26, 2008 on the following questions of law :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in sustaining the assessment merely based on the freight receipt alone is correct in law ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in sustaining further addition when there was no material evidence for such addition as the inspection was conducted only on September 3, 1994 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in sustaining the penalty when there was no evidence to establish that there was a concluded contract of sale which was suppressed by the petitioner is correct in law ?

The revision petitioner/assessee is a dealer in rexine, fabrics, Jatox foam and lining materials and the relevant assessment years are 1993-94 and 1994-95. For the assessment year 1993-94, the petitioner was assessed on the total taxable turnover of Rs. 1,67,649 and Rs. 47,320, respectively. For the assessment year 1994-95, the petitioner/assessee was assessed to tax on a total taxable turnover of Rs. 4,86,129.15 and Rs. 68,018.07, respectively. The place of business of the assessee was inspected by the enforcement wing officers on September 3,1994 and the officer of the enforcement wing has recovered 19 slips under D7 records. In the said D7 records, slips 1 and 2 are relating to the assessment year 1993-94 and slip Nos. 3 to 19 are relating to the assessment year 1994-95. For the assessment year 1993-94, the assessment officer fixed the suppression at Rs. 60,189 and also made equal addition of Rs. 60,189 for probable suppression and determined total suppression at Rs. 1,20,378. For the assessment year 1994-95, the alleged suppression was worked out to Rs. 2,51,287 and also equal addition was made. Further, the assessing officer also levied penalty for both the assessment years. Aggrieved by that order, the assessee filed an appeal before the Appellate Assistant Commissioner disputing the additions and penalty. For the assessment year 1993-94, the Appellate Assistant Commissioner, dismissed the appeal and for the assessment year 1994-95, the Appellate Assistant Commissioner modified the addition and directed the assessing officer to modify the penalty. Aggrieved by that order, the assessee filed appeals before the Sales Tax Appellate Tribunal. The Tribunal dismissed the appeals. Aggrieved by that order, the petitioner/assessee filed the present revisions.

The learned counsel appearing for the petitioner/assessee contended that the order passed by the Sales Tax Appellate Tribunal is illegal, wrong, without basis and justification. He further contended that the lower authorities were not justified in levying tax on the basis of the lorry receipts and also the authorities below failed to consider the vital facts that mere transportation of the goods was not sufficient to infer that the movement were resulted based on a concluded contract of sale. He further contended that both the authorities are wrong in making equal addition and there is no basis and justification for making equal addition and also levying penalty for both the assessment years. Therefore, the order passed by the Tribunal is not 4. in accordance with law and the same has to be set aside.

The learned Government Advocate appearing for the Revenue submitted that all the authorities below have considered the issue and correctly made addition and equal addition and also levied penalty, which is based on valid materials and hence, the order of the Tribunal has to be confirmed.

Heard the learned counsel on either side and perused the documents on record. The business premises of the assessee was inspected by the enforcement wing officer on September 3,1994 and they also recovered 19 slips under D7 records. Slips 1 and 2 relating to the assessment year 1993-94 and made addition of Rs. 60, 189 on the ground that there is actual sales suppression. Even though the learned counsel appearing for the assessee argued that the estimation based on slips 1 and 2 are baseless, when there is no evidence to suggest that there was sales suppression by the assessee, the argument of the assessee cannot be accepted since in both lorry receipts, the consignee''s name was clearly written as AB and sons and full address of the assessee. Therefore, on the basis of the categorical evidence, the assessing officer correctly made actual suppression of Rs. 60,189 and the appellate authority as well as both the authorities had given concurrent finding that there is evidence to show that there was actual suppression. Therefore, the addition made on actual suppression is confirmed. Further, the assessing officer also made equal amount of probable omission and suppression of Rs. 60,189. It is only probable omission and there is no concrete evidence available to make this addition and also there is no material available except on the basis that there is probable omission and suppression. Therefore, in the absence of evidence, addition cannot be made and the Tribunal is wrong in confirming equal amount of probable omission. Therefore, addition of a sum of Rs. 60,189 made on the basis of the equal amount of probable omission and suppression is deleted and consequently, the penalty levied on the same turnover is also deleted. We also confirm the actual suppression made and delete the equal amount of probable omission and corresponding penalty on the turnover is also deleted and the revision in T.C. (R) No. 940 of 2006 is allowed in part. No costs. For the assessment year 1994-95, actual suppression was made at Rs. 2,51,287 relating to the stock discrepancy and suppression found in D7 records. Further, the assessing officer made equal time addition of Rs. 2,51,287 and has also levied penalty of Rs. 1,08,463 u/s 12(3) of the Tamil Nadu General Sales Tax Act, 1959. Aggrieved by that order, the assessee filed an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found discrepancies in the stock transfer and modified the addition made by the assessing officer confirming the order of the assessment and in respect of the penalty, remanded the matter back to the assessing officer to pass fresh order as per the revised tax paid. There is no dispute that in the course of inspection the officers have seized records and found purchase suppression. On the basis of the slip Nos. 3, 7, 9,10,11,18 and 19, the assessing officer made actual suppression and also made equal time addition. There is no dispute that at the time of inspection by the Enforcement Wing Officer, in the place of business of the assessee, stock discrepancy was found and the documents were recovered in 19 slips and they were reflected in the purchase suppression for the assessment year 1994-95. So, the addition made on the basis of the stock discrepancy is based on valid material and also besides stock discrepancy, there is another records revealing purchase suppression, which clearly indicated the account maintained by the assessee are not complete and correct. Further it was found by the authorities below that the recovery of the lorry receipts/ invoices, which were not accounted for in the books of accounts indicates that the assessee is in the habit of transacting outside the books of accounts. Therefore, the authorities have correctly made the actual suppression and also made equal amount for probable omission and the assessee has not filed any document to prove the purchases then accounted for. In such circumstances, the authorities below have correctly made addition and equal addition and also correctly levied penalty, which is based on valid materials and evidence and we do not find any illegality or irregularity in the order passed by the Tribunal for the assessment year 1994-95. In these circumstances, we answer the questions in favour of the Revenue and against the assessee and the revision in T. C. (R) No. 989 of 2006 is dismissed. No costs.